Logi-Ciel is considering marketing a new software that would allow small and medium-sized businesses to manage their manufacturing and distribution activities. The general manager of the company asks for advice from an engineer who collects data on the marketing of this new software. Table 1.5 shows this data.

Table 1.5 Data on the marketing of the company's new product
Logi-Ciel, for the first year

---------------------------------------------------------------

Sales revenue 450,000$

Manufacturing costs 225 000$
(raw materials, direct labor and direct overhead)
Selling and administrative expenses (interest expenses not included) 85 000$
Amortization (calculated on the basis of the utilization rate and included in the overhead) 40 000$
Purchase of 2 microcomputers 25 000 $
(amount payable at the beginning of the second year, as this is an investment investment and not an operating expense)
Annual interest 35 000$
(disbursements during the year on bonds issued to finance required investments)
Initial advertising expenses 17 500$
(to publicize the new software; these expenses have been
disbursed and considered an investment)

Increase in inventory 35 000$
(first year's manufacturing costs will need to be reduced by the value of decreased by the value of this inventory; it is assumed here that the value of the inventory does not contain any depreciation).

Increase in accounts receivable 30,000$

Increase in accounts payable 65 000$
(including $25,000 payable for the purchase of 2 microcomputers)

We ask:
(a) calculate the annual net cash flow from project operations for the year of the project;
b) calculate the annual net profit from the operation of the project for the same period;
c) reconcile the results obtained in a) and b).

Answer rating: 100% (QA)

a Annual net cash flow from project operations for the year of the project Cash from customers for s... View the full answer